Tales of Change

Rachel Botsman: The case for collaborative consumption

"Own a power drill, right? That power drill will be used around 12 to 13 minutes in its entire lifetime. It's kind of ridiculous, right? Because what you need is the hole, not the drill." That's part of the case Rachel Botsman makes for collaborative consumption. Sharing physical goods is one of the collaborative scenarios we'll be building back into our open source NewsCloud platform soon.

Turn off your (cable) television!

This afternoon, I dropped my cable boxes and the annoying digital converters off at my local Comcast. This is the first night in the longest time I have had no cable television in the house.

Note: Only one person at the counter was threatening to sue Comcast if they didn't credit his account (the guy had like 6-7 cable boxes stacked at the counter) that he seemed to be returning. 

I'm not entirely sure why I did it. Partly, I felt I was spending too much time watching TV in the evenings instead of being more social. Partly, I can get some of the shows I want to watch on the Internet. Partly, I got tired of having to call Comcast every six months to get them to reinstate the promotional price on my bill. Partly, I wanted to experiment without it - not just how differently I spend my time but the geek in me wants to see how much entertainment can I get digitally. My primary television has been a Mac for a long time. 

I'll let you know how life is without traditional TV. 

Last week, I wrote a blog post about how Internet data fees are piling up. The New York Times today wrote about a similar topic, As Data Flows In, the Dollars Flow Out:

It used to be that a basic $25-a-month phone bill was your main telecommunications expense. But by 2004, the average American spent $770.95 annually on services like cable television, Internet connectivity and video games, according to data from the Census Bureau. By 2008, that number rose to $903, outstripping inflation. By the end of this year, it is expected to have grown to $997.07. Add another $1,000 or more for cellphone service and the average family is spending as much on entertainment over devices as they are on dining out or buying gasoline.

It's interesting to experiment with buying bandwidth (internet and video) in different forms. It was after all Comcast that forced me to get annoying digiboxes that messed with my Mac set up so they could deliver video in digital form.

I am also aware that Comcast, which I use for broadband Internet, recently capped bandwidth at 250 GB/mo. Partly, I believe they are doing that to prevent people from turning off cable and downloading video from iTunes, streaming from NetFlix, etc. I'm experimenting right now with a WiMax 4G Overdrive (for other reasons) which has no limit on bandwidth. I'll review this device over at Idealog soon.

Print Double Sided

I've been impressed with the affordable Epson Artisan 810 which offers an automatic duplexer for double-sided printing, all for less than $190. Combine this with its capability of printing 2-top or 4-top pages per page and it'll help you save a tree.

Is it time for the U.S. Treasury to provide digital cash?

The New York Times Credit and Debit Card Series raises a lot of interesting consumer questions, namely whether the emerging electronic currency system is simply a hidden private tax on commerce that largely benefits the big banks (yeah, those same ones we recently bailed out with taxpayer dollars):

For the financial year ended in June, Visa handled 40 billion transactions....While the cost per transaction may seem small, at Best Buy ... “these skyrocketing fees add up to hundreds of millions of dollars every year,” said Dee O’Malley, director of financial services. “Every additional dollar we are forced to pay credit card companies is another dollar we can’t use to hire employees, or pass along to our customers in the form of savings.” 

...some merchants are infuriated by a separate, larger fee, called interchange, that Visa makes them pay each time a debit or credit card is swiped. The fees, roughly 1 to 3 percent of each purchase, are forwarded to the cardholder’s bank to cover costs and promote the issuance of more Visa cards. - How Visa, Using Card Fees, Dominates a Market (NYT)

Most notably, credit cards have enabled online commerce. And, credit and debit cards offer tremendous advantages to carrying cash. However, as more and more transactions move from cash to the credit and debit card network, we've carved out a tiny portion but extremely large aggregate revenue stream for the private sector:

In the United States alone, banks that issue credit cards get an estimated $40 billion to $50 billion in income annually from interchange fees, which are the biggest single component of fees charged to merchants. - U.S. Looks to Australia on Credit Card Fees (NYT)

With debit transactions forecast to overtake cash purchases by 2012, the model has investors swooning: Visa’s stock traded at $88.14 on Monday, near a 52-week high, while shares of MasterCard, at $256.84 each, have soared by more than 450 percent since the company went public in 2006. - How Visa, Using Card Fees, Dominates a Market (NYT)

We all appreciate the convenience of ATMs but instead of passing along the savings of fewer bank tellers and branches, the banks created a whole new set of fees for themselves. Americans increasingly have to pay to get access to their money. I once dated a girl who withdrew $20 at a time from her ATM despite the $2 transaction fee.

Want to travel abroad? Getting cash from an ATM or using your credit card may cost you up to 3% (BoingBoing). Even just buying international travel tickets from inside the U.S. can incur these fees. Note: here are some ways to avoid this and here is a way to find better cards.

One of the duties of the U.S. Treasury is "effectively, promoting economic growth and stability". The Times series implicitly asks: is the electronic credit and debit card network creating a drag on our economy?

The prevalence of privatized digital payment systems is raising the prices of consumer products on pretty much everything we buy:

...the 1 to 3 percent or more of every transaction that merchants pay to accept the cards is a significant cost, and the small local retailers that make neighborhoods vibrant often pay a higher percentage. Stores then build those fees into higher prices, so people who aren’t earning any rewards can end up subsidizing those who do. - The Damage of Card Rewards (NYT)

Just as there are calls for the Treasury to stop minting pennies that cost more to produce than they're worth, I think it may be time for the government to recognize that providing secure, U.S. backed digital currency without the privatized tax imposed by MasterCard and Visa:

“A dollar is no longer a dollar in this country,” said Mallory Duncan, senior vice president of the National Retail Federation, a trade association. “It’s a Visa dollar. It’s only worth 99 cents because they take a piece of every one.” - How Visa, Using Card Fees, Dominates a Market (NYT)

There was a day and age where MasterCard and Visa provided a service of convenience that consumers were free to pay for. Today, having a credit card is a necessity - you can't rent a car  without one. 

Just as the government moves information and services online, it's time for it to provide digital options for our currency. Cash is a pre-Internet era currency.

In the United States, the Government Accountability Office last week issued a report showing that consumers who did not use credit cards “may be made worse off by paying higher prices for goods and services, as merchants pass on their increasing card acceptance costs to their customers.” - U.S. Looks to Australia on Credit Card Fees (NYT)

"Merchants say they cannot refuse Visa cards because it would result in lower sales." - How Visa, Using Card Fees, Dominates a Market (NYT)

We could choose to regulate MasterCard and Visa, but given what we've seen this year with healthcare, can we really trust Congress to legislate a fair take? 

The free market seems to be producing a cartel which is fixing prices and placing a drag on our economy. I want a public option.

If Medicare administrates for 6% what the private health insurers charge 20 - 30% to administrate, just think how ridiculously inexpensive our great country could make a public digital currency.

Until Reformed, Minimize Payments to Your Monopolistic Cable Provider

While this is a less serious issue than healthcare, most of us face unfairly high monthly service fees and poor customer service from our monopolistic local cable companies. In Seattle, we struggle with Comcast, which is poorly regulated by the City of Seattle. 

Until local governments require cable companies to provide high quality service at competitive rates and end common bundling practices, I suggest trying to minimize the money you're spending with them.

1) Call every six months to demand the lowest rate. It's ridiculous that a company providing a service regulated by the city is not required to provide a competitive rate, but that's the way it is in Seattle currently. In 2009, I managed to have my rate cut from $109 to $63 per month with the same service level. That's $552 annually for making one phone call. It helps to keep competitive junk mail offers in hand when you do this.

2) Comcast recently quietly increased its monthly cable modem rental to $60 annually. You can buy a used or refurbished modem at Amazon for about $35. Make sure you pick a cable modem compatible with your provider.

3) Consider transitioning more of your television viewing via online options. Cable Freedom Is a Click Away (New York Times) is an excellent primer on using the Internet to watch television using various services e.g. iTunes, Boxee, Hulu, Joost, Hulu, Netflix streaming et al. I currently use a MacMini, Apple LCD display and El Gato EyeTV 200 as my DVR and media center.

4) Contact your Mayor and City or County Council prior to the re-negotiation of their next contract with your cable provider. 

Read Glenn Fleishman's post The Killer App of 1900: Electricity about the need for broadband Internet reform in Seattle.  

Electric lights are different. Electricity is not in any sense a necessity, and under no conditions is it universally used by the people of a community. It is but a luxury enjoyed by a small proportion of the members of any municipality, and yet if the plant be owned and operated by the city, the burden of such ownership and operation must be borne by all the people through taxation. Now, electric light is not a necessity for every member of the community. It Is not the business of any one to see that I use electricity, or gas, or oil in my house, or even that I use any form of artificial light at all.

Also, check out this 2003 editorial by Jonathan Lawson: Comcast can do better by subscribers or visit his Reclaim the Media's organization website for information about their access campaigns: 

The $1.2 million payoff Comcast has offered may sound like a lot of money. It's not, considering the technology resources it would get in return. According to documents filed by Comcast in its recent unsuccessful lawsuit against the city of San Jose, the company estimated that a single cable channel had a value of $2.6 million per year (figure $1.3 million in King County's smaller market). The $1.2 million Comcast is offering King County for five channels works out to about $48,000 per channel per year. In short, King County is being offered a sucker deal, less than 4 cents on the dollar. Chump change, on top of a trail of broken promises and short-changing local non-commercial programming.

Don't let your city undersell its infrastructure! Get involved! Fleishman recommends a visit to Broadband.gov.